bank for international settlements


  • [9] At the outbreak of World War II in September 1939, the BIS Board of Directors – on which the main European central banks were represented – decided that the Bank should
    remain open, but that, for the duration of hostilities, no meetings of the Board of Directors were to take place and that the Bank should maintain a neutral stance in the conduct of its business.

  • The original goal of the BIS was “to promote the co-operation of central banks and to provide additional facilities for international financial operations; and to act as trustee
    or agent in regard to international financial settlements entrusted to it under agreements with the parties concerned”, as stated in its Statutes of 1930.

  • Organization of central banks As an organization of central banks, the BIS seeks to make monetary policy more predictable and transparent among its 60-member central banks,
    except in the case of Eurozone countries which forfeited the right to conduct monetary policy in order to implement the euro.

  • BIS aims to keep monetary policy in line with reality and to help implement monetary reforms in time, preferably as a simultaneous policy among all 60 member banks and also
    involving the International Monetary Fund.

  • Established: 17 May 1930; 92 years ago; Type: International financial institution; Purpose: Central bank cooperation; Location: Basel, Switzerland (Extraterritorial jurisdiction);
    Coordinates: 47°32′53″N 7°35′31″E; Membership: 63 central banks; General manager: Agustín Carstens (Mexican); Main organ: Board of directors[1] ; Staff: 1300 History The BIS was established in 1930 by an intergovernmental agreement between
    Germany, Belgium, France, the United Kingdom, Italy, Japan, the United States, and Switzerland.

  • BIS shares traded on stock markets, which made the bank an unusual organization: an international organization (in the technical sense of public international law), yet allowed
    for private shareholders.

  • However, the rights of voting and representation at the Bank’s General Meeting were to be exercised exclusively by the central banks of the countries in which shares had been

  • Goal: monetary and financial stability The stated mission of the BIS is to serve central banks in their pursuit of monetary and financial stability, to foster international
    cooperation in those areas and to act as a bank for central banks.

  • The collapse of some internationally active banks, such as Herstatt Bank (1974), highlighted the need for improved banking supervision at an international level.

  • [17] This Committee had been created by the European Council decision to improve monetary cooperation among the EC central banks.

  • Through its member central banks, the BIS was actively involved in the resolution of the Latin American debt crisis (1982).

  • The BIS pursues its mission by: • fostering discussion and facilitating collaboration among central banks; • supporting dialogue with other authorities that are responsible
    for promoting financial stability; • carrying out research and policy analysis on issues of relevance for monetary and financial stability; • acting as a prime counterparty for central banks in their financial transactions; and • serving as
    an agent or trustee in connection with international financial operations.

  • [22] Members Sixty-three central banks and monetary authorities are currently members of the BIS and have rights of voting and representation at general meetings.

  • Historically, the United States also did this, by dividing federal monetary management into nine regions, in which the less-developed western United States had looser policies.

  • This was reflected in a gradual increase in its membership (from 33 shareholding central bank members in 1995 to 60 in 2013, which together represent roughly 95% of global
    GDP), and also in the much more global composition of the BIS Board of Directors.

  • For instance, the People’s Bank of China requires urban banks to hold 7% reserves while letting rural banks continue to hold only 6%, and simultaneously telling all banks
    that reserve requirements on certain overheated industries would rise sharply or penalties would be laid if investments in them did not stop completely.

  • The fact that top-level German industrialists and advisors sat on the BIS board seemed to provide ample evidence of how the BIS might be used by Hitler throughout the war,
    with the help of American, British and French banks.

  • While monetary policy is determined by most sovereign nations, it is subject to central and private banking scrutiny and potentially to speculation that affects foreign exchange
    rates and especially the fate of export economies.

  • The BIS was originally owned by both central banks and private individuals, since the United States, Belgium and France had decided to sell all or some of the shares allocated
    to their central banks to private investors.

  • Central banks do not unilaterally “set” rates, rather they set goals and intervene using their massive financial resources and regulatory powers to achieve monetary targets
    they set.

  • [19] Profits from its transactions are used, among other things, to fund the bank’s other international activities.

  • Currently, the red books cover countries participating in the Committee on Payments and Market Infrastructures (CPMI).

  • The PBoC is thus unusual in acting as a national bank, focused on the country and not on the currency, but its desire to control asset inflation is increasingly shared among
    BIS members who fear “bubbles”, and among exporting countries that find it difficult to manage the diverse requirements of the domestic economy, especially rural agriculture, and an export economy, especially in manufactured goods.

  • It also provides banking services, but only to central banks and other international organizations.

  • For instance, in the late 1930s, the BIS was instrumental in helping continental European central banks ship out part of their gold reserves to London.

  • From an international point of view, ensuring capital adequacy is key for central banks, as speculative lending based on inadequate underlying capital and widely varying liability
    rules cause economic crises as “bad money drives out good” (Gresham’s Law).

  • According to the charter, shares in the bank could be held by individuals and non-governmental entities.

  • [4][5] The BIS was originally intended to facilitate reparations imposed on Germany by the Treaty of Versailles after World War I, and to act as the trustee for the German
    Government International Loan (Young Loan) that was floated in 1930.

  • It acted as a meeting forum for central banks and provided banking facilities to them.

  • Financial results BIS denominates its reserve in IMF special drawing rights.

  • [6] The need to establish a dedicated institution for this purpose was suggested in 1929 by the Young Committee, and was agreed to in August of that year at a conference at
    The Hague.

  • Many central banks had similarly started as such private institutions; for example, the Bank of England was privately owned until 1946.

  • The Bank for International Settlements (BIS) is an international financial institution[2] owned by central banks that “fosters international monetary and financial cooperation
    and serves as a bank for central banks”.

  • Two aspects of monetary policy have proven to be particularly sensitive, and the BIS, therefore, has two specific goals: to regulate capital adequacy and make reserve requirements

  • Reserve policy is harder to standardize, as it depends on local conditions and is often fine-tuned to make industry-specific or region-specific changes, especially within
    large developing nations.

  • It acted as Agent for the European Payments Union (EPU, 1950–58), an intra-European clearing arrangement designed to help the European countries in restoring currency convertibility
    and free, multilateral trade.

  • [27] Red Books One of the Group’s first projects, a detailed review of payment system developments in the G10 countries, was published by the BIS in 1985 in the first of a
    series that has become known as “Red Books”.

  • The Group of Ten (G10), including the main European economies, Canada, Japan, and the United States, became the most prominent grouping.

  • Accordingly, the Basel standards require the capital/asset ratio of internationally active commercial banks to be above a prescribed minimum international standard, to improve
    the resilience of the banking sector.

  • [18] It is now wholly owned by BIS members (central banks), but still operates in the private market as a counterparty, asset manager and lender for central banks and international
    financial institutions.

  • [28] A sample of statistical data in the red books appears in the table below, where local currency is converted to US dollars using end-of-year rates.


Works Cited

[‘”Board of Directors”. Archived from the original on 22 April 2011. Retrieved 2011-04-14.
2. ^ “About BIS”. 2005-01-01. Retrieved 2016-03-17.
3. ^ “About BIS”. Web page of Bank for International Settlements. January 2005.
Archived from the original on 14 May 2008. Retrieved May 17, 2008.
4. ^ “UNTC”.
5. ^ “About the BIS – overview”. 1 January 2005.
6. ^ BIS History – Overview. BIS website. Retrieved 2011-02-13.
7. ^ “Protocol regarding
the immunities of the Bank for International Settlements” (PDF). Archived (PDF) from the original on 2022-10-09.
8. ^ “Note on gold shipments and gold exchanges organized by the Bank for International Settlements, 1st June 1938 – 31st May 1945”. 1 September 1997.
9. ^ Kubu, E. (1998). “Czechoslovak gold reserves and their surrender to Nazi Germany” In Nazi Gold, The London Conference. London: The Stationery Office, pp. 245–48.
10. ^ Toniolo, G., Central Bank Cooperation at
the Bank for International Settlements, 1930-1973 (Cambridge: Cambridge University Press: 2005), pp. 245–252.
11. ^ Higham, Charles (1995). Trading with the Enemy: The Nazi-American Money Plot, 1933–1949. Barnes & Noble. ISBN 9780760700099.
12. ^
United Nations Monetary and Financial Conference, Final Act, Article IV. London, 1944.
13. ^ Raymond Frech Mikesell. The Bretton Woods Debates: A Memoir. Princeton: International Finance Section, Dept. of Economics, Princeton University. p. 42.
ISBN 0-88165-099-4. Retrieved 8 July 2013. Essays in International Finance 192 brief history of the BIS
14. ^ “History – the BIS during the Second World War (1939-48)”. Bank for International Settlements. October 14, 2014.
15. ^ Kaplan, J. J.
and Schleiminger, G. (1989). The European Payments Union: Financial Diplomacy in the 1950s. Oxford: Clarendon Press.
16. ^ Toniolo, G., Central Bank Cooperation at the Bank for International Settlements, 1930-1973 (Cambridge: Cambridge University
Press: 2005), p. 416.
17. ^ James, H. (2012). Making the European Monetary Union, The Role of the Committee of Central Bank Governors and the Origins of the European Central Bank. Cambridge-London: The Belknap Press of Harvard University Press
18. ^
“Press release: BIS completes redistribution of shares”. 1 June 2005.
19. ^ “Products and services”. 21 January 2003.
20. ^ “IMF approves $1.4 billion Ukraine aid and BIS suspends Russia”. Central Banking. March 10, 2022.
21. ^
Bank for International Settlements, Statutes, 20 January 1930 (text amended 7 November 2016).
22. ^ BIS, “Time to ignite all engines, BIS says in its Annual Economic Report”, 30 June 2019.
23. ^ Jones, M., “Bank for International Settlements sees
first expansion since 2011”, Reuters, January 14, 2020.
24. ^ BIS member central banks, BIS.
25. ^ “Functionaries of the Board of Directors”. 10 November 2015.
26. ^ “Functionaries of the Board of Directors”. October 2008.
27. ^ Erik Boomsma,
Interview with Roland Bernard, published by Café Weltschmerz, April 2022.
28. ^ “About the CPMI”. 2 February 2016.
29. ^ “BIS Statistics Explorer: Table CT2”.
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